A First Time Home Buyer And A New Job : A Guideline
A new job and a new home are times to celebrate in each person's life. However, with little job experience and being the new guy/girl at the office can cause problems for buying a new home. However, all hope is not lost, these are the guidelines to understand to finding your perfect home.
These guidelines explain what lenders are looking for when you apply for that first home.
Lenders care about one thing: Are you able to pay back the loan in the time stated? Most lenders consider your job experience and your salary when lending you the needed money. Lenders prefer to give money to those who have worked in their field for two years. This gives the notion that you have job security and will be able to find a new job easily if something happens.
However, not all lenders need a strict two-year employment history. It all depends on other qualifications they find more pressing.
If you find your employment history is not extensive, check your credit score. The better your FICO credit score is the more a lender is willing to overlook your employment history. As a general rule of thumb, you will need a 700 or higher FICO credit score. A FICO score is your credit history calculated into five different categories these are: payment history, new credit, accounts owned, credit mix, and length of credit history. There are plenty of free apps to calculate your credit score.
A few tips to getting that 700 and higher credit score is:
- Pay off debt on time and pay on a credit card every month.
- Put utilities in your name. They help a little bit.
- Pay your car payment on time.
- Pay your rent on time.
Your Job and Income
When you apply for a mortgage, lenders not only care about your work history, but your annual income as well. This is because they need to know how much you can pay back and if it is affordable. A great tool to use is a mortgage calculator. This will tell you beforehand how much you can realistically afford right now.
It is important to note that you do not always need a full-time position for mortgage lenders to give you a loan. Most of the time, if you work part-time and have had little gaps in your work history, they are willing to work with you.
For most, student loan debt is something that haunts them for a long time. This is something else that is taken into consideration. There are two ways lender compare your debt, income, and your ability to pay the money back.
Front-End: This is where lenders compare your debt to your income (excluding the mortgage payment).
Back-End: Lenders also look at your debt and income including your mortgage payment. If you have a high amount of debt to your income, it will affect where you stand at in your ratio.
This allows lenders to notice if there is going to be a strain between your existing debt and your new mortgage payment.
When it comes to a new job and getting approved for a new house it seems like a daunting task; however, it doesn’t have to be this way. Do research on your debt and credit score. This way, you know what you can afford in the future. Please contact us today if you have any concerns or questions. We will be happy to assist you!